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Anticorruption in Transition 3 – Who is Succeeding … And Why?

Anticorruption in Transition 3 – Who is Succeeding … And Why?. World Bank, November 2006. www.worldbank.org/eca/act3. The Big Questions. Is corruption in Eastern Europe and the former Soviet Union – including Moldova – getting better or worse? What explains the changes?.

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Anticorruption in Transition 3 – Who is Succeeding … And Why?

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  1. Anticorruption in Transition 3 – Who is Succeeding … And Why? World Bank, November 2006 www.worldbank.org/eca/act3

  2. The Big Questions Is corruption in Eastern Europe and the former Soviet Union – including Moldova – getting better or worse? What explains the changes?

  3. A Tool for Monitoring Corruption “Business Environment and Enterprise Performance Survey” (BEEPS) • Joint initiative with EBRD • 20,000 firms in 3 rounds (1999, 2002, 2005) • 26 transition countries • 6 European comparators in ‘05: Ireland, Germany, Greece, Portugal, Spain, Turkey (+ Korea and Vietnam) • Focus on corruption in enterprise-state interactions

  4. Corruption Indicators used in BEEPS • Frequency of bribery • Tax • Customs • Business Licensing • Procurement • Judiciary • Bribe “tax” • State capture • Corruption as a problem for business

  5. Is corruption getting better or worse? …and how do transition countries compare with European comparators?

  6. Corruption is falling for the region as a whole(though not yet to W. Europe levels)… Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?

  7. … but not in all countries … Bribe Frequency by country, 2002-2005 Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?

  8. … and not in all sectors. Bribe Frequency by sector, 2002-2005 Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?

  9. Many Moldovan firms see corruption as a problem for business…but fewer than in 2005. Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?

  10. Moldovan firms report the highest levels of corruption in the following areas: • Customs(improving but still high) • Business licensing(no change over 3 years) • Tax(major improvement but still significant) • Government procurement(rising) …and state capture is still relatively high in Moldova and other SEE countries.

  11. New private firms continue to pay the most bribes. Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?

  12. Why the improvement in ECA?

  13. “Doing Business” Survey of accountants and lawyers on time and cost of: Starting a business Dealing with licenses Hiring and firing Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business A Tool for Monitoring Policies and Institutions

  14. Transition countries lead the world in business-friendly policy reforms… Source: Doing Business in 2007

  15. 3 of the top 10 reformers in 2005 were in ECA… 1. Georgia 2. Romania 3. Mexico 4. China 5. Peru 6. France 7. Croatia 8.Guatemala 9. Ghana 10. Tanzania Source: Doing Business, 2007

  16. … and reforms are in many areas. • Tax • Low rate, broad based taxes (e.g. Baltics and Slovakia) • Customs • IT, risk-weighted inspections (SE Europe) • Regulatoryenvironment • deregulation; less frequent inspections (Georgia) • Courts • independence, efficiency, transparency (Romania) • Procurement • transparency and capacity-building (Poland)

  17. However, the ease of doing business still varies widely among countries. Lithuania 16 Source: Doing Business in 2007

  18. Moldova ranks well in a fewpolicy areas but not most…[note: lower score is better] Source: Doing Business in 2007

  19. … and some progress has been made in addressing accountability and transparency. Source: World Bank project on Actionable Indicators; update of Dorhoi (2005)

  20. What motivates change?

  21. The “carrot” of EU Accession has been a strong motivator of reform. Source: Anticorruption in Transition 3 – Who is Succeeding … and Why?; based on the Anticorruption Assessment Index in Dorhoi (2005).

  22. Most importantly, every country that has made significant progress has hadstrong and committed leadership.

  23. To summarize • Corruption in enterprise-state relations is falling in many transition countries...including Moldova. • but wide variation among sectors • Policy and institutional reforms matter. • Customs, business licensing, taxation, and public procurement are some key areas for Moldova • Strong leadership is essential, and countries need to continue their efforts. • Still a distance from EU norms • Complacency is not an option in today’s globalized world

  24. Anticorruption in Transition 3:Who is Succeeding … And Why? www.worldbank.org/eca/act3 For more information on economic policy and governance: www.worldbank.org/eca/econ

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